PROFIT ISSUE CLOUDS METHADONE DEBATE

BANGOR -- Even if Eastern Maine Healthcare made money from its proposed
methadone clinic for heroin addicts, it wouldn't be much.

The clinic, to be operated by EMH subsidiary Acadia Hospital, ultimately
would generate revenues on the order of $624,000 a year for treatment of a
maximum of 150 patients -- assuming all were covered by Medicaid. From
those revenues would be deducted operational and related expenses.

Any profit would be small for EMH, the regional health system that owns
Eastern Maine Medical Center. It has revenues of more than $370 million
annually.

Acadia's plans, proposed after urging by Maine's Department of Mental
Health, Mental Retardation and Substance Abuse Services to address growing
opiate addiction in the area, have generated bitter arguments within the
Bangor community. Some critics such as U.S. Attorney Jay McCloskey charge
profit is a motivation. That's vehemently denied by EMH officials.

Sorting the competing arguments is difficult. Nationally, the focus has
been more on the medical arguments for and against treating heroin addicts
with methadone than on the profitability of treatment programs.

Certainly, many privately run programs have been profitable elsewhere.
These businesses live off the difference between Medicaid reimbursements of
$80 or so a week and the cost of methadone, which is pennies per patient,
and any related services provided.

But the most profitable programs have offered as little counseling as
possible. Acadia said it plans to provide significant counseling for
patients to help them kick the habit. That continuing assistance would
likely go unreimbursed because no one can clearly identify where additional
reimbursement would come from.

"They could provide daily counseling but it wouldn't get them any
additional reimbursement,"said Chris Nolan, director of financial services
for the state's Bureau of Medical Services, which oversees Medicaid.

Some critics in Bangor have said they understood that Medicaid
reimbursement would soon cover all services related to the dispensing of
methadone, including counseling. Maine Medicaid officials, however, said
that there is no rule change on the horizon.

That's by design, said Francis T. Finnegan Jr., who spent more than a
decade as director of the Bureau of Medical Services until stepping down
this spring to become a private health consultant.

"We sure as hell didn't want to make it into a gold mine," he said.

Assuming Acadia indeed serves as many as 150 addicts, the Maine Medicaid
reimbursement rate of a flat $80 a week for every individual would bring in
more than $600,000 in revenues, if all were Medicaid-eligible.

There is disagreement over what percentage of Acadia's methadone patients'
treatment would be paid for by Medicaid, however. Critics and an expert
with the Robert Wood Johnson Foundation say the patient mix would likely be
about 80 percent Medicaid with the rest charity cases or privately insured.
Acadia and the mental health department contend that the patient mix would
be one-third private insurance or other, and one-third free care. That
would mean even less money for the hospital.

The mental health department is charged with issuing a license on the
proposal. That process is on hold until January as the community and Acadia
work to sort out the arguments.

The debate is not without inconsistencies.

Ali El Haj, president of Acadia, said that no one in EMH looked at more
than two-year financial projections for the program. He said it would lose
up to $25,000 the first year and break even in the second. Further
projections are unnecessary because presumably the problem of heroin
addiction would lessen, he said.

Norman Ledwin, EMH's CEO, said the projections weren't made because there
are too many variables to consider. "I don't know if three or five years
would be reasonable," he said.

Yet Lynn Madden, Acadia vice president of administrative services, said she
did make projections when analyzing the proposed program. She explained
they weren't something she put down on paper formally.

El Haj said in an interview that St. Joseph Hospital was "on board" with
the idea of the new clinic. Asked to confirm the statement, St. Joseph
issued a release saying it had taken no position on the matter.

EMH officials have reacted angrily to the question of profitability. They
point to the $5 million a year Acadia Hospital provides in unreimbursed
free care. Nonprofit organizations are supposed to be committed to serving
the public good, they argue.

But experts say profitability as well as other financial considerations are
increasingly relevant and deserve discussion. The questions should be asked
in a health care system where hospitals, for better or for worse, pay ever
greater attention to the bottom line, they said. EMH, though a nonprofit
holding company, has for-profit subsidiaries that compete against other
for-profit service providers in the community. Such changes are not unique
to Maine's hospital nonprofits as the line between profit and
not-for-profit blurs nationally.

Still, Acadia employees who would run the program talk about how the
hospital is developing it with patients, not profits in mind.

"It's going to be a lot more holistic than a lot of treatment programs,"
said Scott O. Farnum, clinical supervisor of Acadia Recovery Community's
Narcotic Treatment Program. While for-profit programs often just evaluate
patients for methadone treatment, Acadia wants to move people away from
their previous lifestyle by helping with all their problems -- from how
they will take care of their kids to housing issues.

Farnum said it's just the right thing to do.